Capitalism? Whats that?

Capitalism is a term that has been the subject of ongoing debate among scholars, with no clear consensus on its precise definition or how it should be used as a historical category. Some define capitalism as a system based on private ownership of the means of production, while others argue that it is defined by the existence of wage labor and markets. Despite this lack of agreement on a precise definition, most scholars agree that capitalism involves the creation of goods or services for profit in a market economy, with what ‘should be’ prices and wages determined by supply and demand of the people.

Capitalism has been applied to a variety of historical cases, varying in time, geography, politics, and culture. Some of the most common forms of capitalism include free-market capitalism, mercantilism, social market economy, state capitalism, corporate capitalism, and mixed economy.

Free-market capitalism is based on the idea of a free-price system, where supply and demand are allowed to reach their point of equilibrium without government interventions. In a free-market capitalist system, productive enterprises are privately owned, and the role of the state is limited to protecting property rights.

Mercantilism, on the other hand, is a nationalist form of early capitalism that ties national business interests to state interests. Under mercantilism, the state apparatus is utilized to advance national business interests abroad, with the belief that the wealth of a nation is increased through a positive balance of trade with other nations.

A social market economy is a nominally free-market system where the government intervention in price formation is kept to a minimum. However, the state provides moderate to extensive provision of social security, unemployment benefits, and recognition of labor rights through national collective bargaining schemes. The social market is based on private ownership of businesses.

State capitalism (Crony) consists of state ownership of profit-seeking enterprises that operate in a capitalist manner in a market economy. Examples include corporatized government agencies or partial state-ownership of shares in publicly listed firms. The term state capitalism has also been used to refer to an economy consisting mainly of private enterprises that are subjected to comprehensive national economic planning by the government, wherein the state intervenes in the economy to protect specific capitalist businesses (although this is usually referred to as state monopoly capitalism or corporate capitalism). Many socialists and anti-Stalinist leftists argue that the Soviet Union was state capitalist instead of socialist since the state owned all the means of production, functioned as an enormous corporation, and exploited the working class.

Corporate capitalism (Crony) is a free or mixed-market characterized by the dominance of hierarchical, bureaucratic corporations, which are legally required to pursue profit. State monopoly capitalism refers to a form of corporate capitalism where the state is used to benefit, protect from competition, and promote the interests of dominant or established corporations.

You might have noticed I labeled both state and corporate capitalism as ‘crony’ to underline the manipulative dynamics where businesses lobby government officials or where business owners appoint proxies to run their corporate entities while they occupy governmental positions. This intertwining of corporate and state interests corrupts the market, steering it away from free competition and towards a system that favors those with the power to influence. Both forms manifest the same underlying issue: the use of state power to grant unfair advantages to certain businesses, creating an uneven playing field and distorting the essence of free-market principles.

Finally, a mixed economy is a largely market-based economy consisting of both public ownership and private ownership of the means of production. In practice, a mixed economy will be heavily slanted toward one extreme, with most capitalist economies defined as “mixed economies” to some degree, characterized by the dominance of private ownership.

Despite the different forms of capitalism, the reality of capitalism in practice is often different from its idealized form. For example, the Federal Reserve System, which is a “private” bank, controls the money supply in the United States, making decisions without the permission of Congress or the President. This creates a rigged market that is not equal, as one “private” party controls all the money.

For example, the Occupy movement’s protests have been misdirected towards ending all forms of capitalism, which is not the correct focus. It is crucial for individuals to avoid lumping all forms of capitalism together and to learn about its various forms instead. The confusion surrounding capitalism is perpetuated by those in power to maintain control over the economy and advance their own interests.

Agorists, on the other hand, believe that the ideal form of capitalism is one where individuals are free to trade goods and services in a truly free market, with no interference from the state. Agorism is a strategy of creating a new society within the shell of the old, by engaging in counter-economic activities that operate outside of the state’s control.

In this sense, agorism offers a direct action solution to the problems associated with the current crony capitalist (central) system, such as state intervention and collusion between corporations and the state. By creating a new, truly free market based on voluntary exchange, agorists aim to create a society where individuals are free to trade without interference from the state and entrepreneurs are free to compete and innovate without fear of government intervention.

Most scholars recognize that capitalism involves generating goods or services for profit within a market economy. However, it’s crucial to distinguish capitalism from consumerism; the former is an economic system for creating and distributing wealth, while the latter focuses on the acquisition of goods by consumers. The state’s significant role in the economy often skews the practice of capitalism away from its theoretical free-market principles. Agorists promote free market anarchism, emphasizing voluntary and consensual economic transactions. They partake in counter-economic activities to forge a society rooted in the ethics of free market barter and trade, aiming to differentiate from consumer-driven motives and focus on sustainable, value-based economic interactions. In a true democracy, individuals vote with their dollars, directly funding activities and enterprises they support. If given the choice, most would likely not fund the activities of oligarchs, highlighting the power of direct financial decisions in shaping economic landscapes.

Socialism is inherently immoral unless it becomes voluntary – Capitalism is potentially dangerous unless it is bound by the Non-Aggression Principle. – From “Voluntary Socialism” by Marley James